The way I do it for Grub 1, it might not work so for Grub 2, is that on start up you see a menu. [Select line you wish to boot from, if you have to] Press 'e' to edit. Get lines to edit. Select line beginning 'kernel' and press 'e' again. Then append 'persistent' to this line. Press 'Enter', then press 'b'. Good luck.

I can see where you're getting Eventually you'll want to copy the live CD on to your USB hd, and boot from there? Will be much faster. I've done it for my own normal hd, and I just run the live DVD image.

First of all Tejas can I thank you for your help.
Perhaps I should have explained what I'm trying to do.
At the moment I run puppy linux as follows:-
I insert a usb stick to any computer, insert the live Cd, boot from the live CD and now anything I do when I exit the live Cd is saved on the USB stick.This gives me a truly portable os
This is what I want to do withKanotix

_________________My choice early in life was either to be a piano-player in a whorehouse or a politician. And to tell the truth, there's hardly any difference.
-- Harry S. Truman (circa 1962)

The way I understand it is that every time you use your live CD you will have to append 'persistent' tto the boot menu line. I use DSL to print from my clapped out old m/c as my new m/c all USB, and on closing down have persistence option. So, in your case for a truly portable os you need to stick the DVD image (more comprehensive) on USB and boot from USB, thereby dispensing with the CD. Otherwise every time you boot up, you'll have to remember to edit the boot line and add persistent. I'm not sure if there's a way of changing the boot up file on the CD, but you can easily request the BIOS to boot from USB, and once you take that route you might as well dispense with the CD altogether.

My script cleans the usb drive (it has a security check that it does not work on usb hd) and creates 2 partitions. The first is fat32, only slightly bigger than the the iso size, the 2nd is ext4. The ext4 partition will be used as permanent overlay, of course thats slower as when the overly is in a ramdrive. As it downloads syslinux from the internet be sure you are connected to the net when you execute it. btw. it also works with similar images from u. the script without "persistent" in the name can even handle win v/7/8 images as well. basically the persitent script would work there too, the 2nd partition is just useless